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Of Nukes and Oil


Secretary of State Condi Rice doesn’t think the United States and European Union should continue talking to Iran about their potential nuke development. Diplomacy should end and the UN Security Council must now take action, she says. Rice admitted to reporters on January 23, that dialogue between Iran and the international community had come to a “dead end”.

“I don’t see much room for further discussion in any format,” Rice huffed.

Of course, the US’s true intentions for going after Tehran may have more to do with what’s hidden beneath Iran’s arid soil than their nuclear ambitions.

Currently the second largest untapped oil reserve in the world is in Iran. Iran has five times more oil than the US. The industry’s reputable Oil and Gas Journal in 2005 estimated 125.8 billion barrels were in the country just waiting to be pumped. Iran is also the number 2 producer in the Organization of Petroleum Exporting Countries (OPEC).

The majority of Iran’s crude oil is located in Khuzestan, which borders Iraq and the Persian Gulf is the home to two of Iran’s largest untapped oil fields — Yadavaran and Azadegan. So it really shouldn’t be a surprise that the oil boys in Washington want dibs on Iran’s oil-rich land.

But there’s a problem, and it could be a substantial glitch in the neo-con’s agenda if Iran’s nuclear dabbling is taken before the Security Council where it may well be vetoed by China and Russia. The only other alternative if the Council were to veto Iran sanctions would be to invade.

The Chinese government already has its eye on Yadavaran. The Chinese state oil company China Petroleum & Chemical Corporation has a 50 percent stake in the vast Yadavaran oil field.

Russia too has a stake in Iran’s oil-rich economy. In 2003 Russia sought to diversify its oil procurement and distribution methods by shipping Russian crude to Iran, where it is was refined for domestic consumption. In return, Iran now delivers an equivalent amount of oil to Russia. As the Asia Times explained in February 2003, “This arrangement will make Russian oil available to non-European buyers at a competitive price by sharply decreasing the cost of exports currently done by oil tankers loaded at Russia’s Black Sea ports…”

The threat of UN sanctions has the oil speculators and markets worried sick. Prices have been in flux over the past few weeks as Iran has threatened to pull its huge foreign exchange reserves from European banks. If the Iranian government is anything, it isn’t stupid. Tehran knows the threat of yanking the country’s cash from Western banks will upset the US stock exchange, which in turn will damage the Bush administration. Iran is flexing what little muscle it has left in hopes that its nuclear agenda doesn’t go before the Security Council. The mullahs are just playing politics. But what’s worrying Washington more than Iranian nukes may be a much different WMD.

In March 2006, Iran is slated to open the long awaited Iranian Oil Bourse (oil exchange program). Currently the petrodollar is dominated by US currency, but Iran and other OPEC countries want that to end. When the bourse opens, Iran will be trading on a euro-oil-trading system, the first step toward an alternative petrodollar. That could be bad news for the US.

“In economic terms, this represents [a great threat] because it will allow anyone willing either to buy or to sell oil for Euro to transact on the exchange, thus circumventing the U.S. dollar altogether,” writes Krassimir Petrov, an economics professor at the American University in Bulgaria in a January edition of the Energy Bulletin.

“Europeans will not have to buy and hold dollars in order to secure their payment for oil, but would instead pay with their own currencies. The adoption of the euro for oil transactions will provide the European currency with a reserve status that will benefit the European at the expense of the Americans … The Chinese and the Japanese will be especially eager to adopt the new exchange, because it will allow them to drastically lower their enormous dollar reserves and diversify with Euros, thus protecting themselves against the depreciation of the dollar.”

The Bush boys don’t want that to happen. Oil is likely not the only reasons why the US wants to destroy Tehran’s military capabilities, but it does look like one of the big motivations. The United States wants the global oil trade, and in particular OPEC, to primarily benefit America.

What we are seeing may be a new form of economic globalization in the making — one that involves the forced eradication and trading of natural resources.

You may want to think about that next time you start your engines.

JOSHUA FRANK is the author of Left Out!: How Liberals Helped Reelect George W. Bush, just published by Common Courage Press. You can order a copy at a discounted through Josh’s blog at Josh can be reached at


JOSHUA FRANK is managing editor of CounterPunch. His most recent book is Hopeless: Barack Obama and the Politics of Illusion, co-edited with Jeffrey St. Clair and published by AK Press. He can be reached at You can follow him on Twitter @joshua__frank

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